The Novice Investor's Route

Scenario

·         Have an idea: X

·         You or your partner possesses a unique skill set: X

·         Have relevant industry experience: X

·         Have relevant industry contacts: X

·         Have capital: ✓

Strategy

Often people come up with their query that I have some money, what kind of a business I should start in this amount. This question is incorrect. Because there are far more important things than capital which an entrepreneur needs to consider while having a sufficient amount of capital is not a guarantee of anything.

Capital can be an enabler, but cannot ensure the success of your venture. Evidence suggests that the most important thing is not even a business idea, as it may change as you move forward in the process of setting up a venture.

The most important asset any wanta-preneur possesses is perhaps his/her network! Starting a business is never an isolated phenomenon, as it rather requires working with suppliers, vendors, or third-party contractors, employees, retailers, and most importantly customers.

Strong interpersonal skills for effective management of relationships with all the stakeholders is perhaps the most essential trait a wanta-preneuer can possess before starting a business.

If you do not have any prior entrepreneurial, and industry experience. Then there are no shortcuts. First, you will have to gain entrepreneurial experience in a specific market segment. A segment in which you have enough people to support you in case you collapse. While you are learning how to swim, you may want to be in the water with people who you can trust, and who will support you in case you begin to sink.

Make a list of people in your contact list working in different industries or market domains who might be willing to give you a helping hand. If you decide to go to the B2B market then you better know in advance any potential customer who will be willing to avail your services or purchase your product. If you don’t know such a corporate customer personally, then you must ask others in your network to help you connect with one.

See which of your connections can become or can connect you with a potential supplier, vendor, and third-party contractor. Looking at the list of potential stakeholders, and potential customers, you may work out a possible business idea, that is, you may find out a specific customer need which you can fulfill with the aid of the suppliers, vendors, and third-party contractors in your network.

If you have some potential customers, and no potential suppliers or vendors, then expand your network to find suppliers or vendors who are willing to work with you, if you cannot find in your immediate network then explore the network of the people already in your network. See page 90 for more details.

Once you are connected with all the stakeholders and can deliver a product or service to a target audience in your network (click here to know how to find your target audience), focus on one customer at a time! Remember your goal is to gain experience in the market, customer behavior, and behavior of other stakeholders. Let growth happen slowly, and gradually, let happy customers bring more customers by generating positive word of mouth which is considered to be the best marketing strategy by business experts.

Now gradually build your customer base while reinvesting profits. Once you have enough confidence in your venture, you may now invest your capital to expand.

Hire people to help you only when you think you can't meet customer demand on your own! (click here to learn about hiring strategies) 

Before investing in, one must work out how much one can afford to lose. Contrary to general perception, entrepreneurs globally are not gamblers, they very carefully calculate the risks, and try to minimize them as much as possible.

Keep cash safe for rainy days, and do not spend on anything which does not help your business grow by any means.

Your first goal should be to develop a cash cow for yourself, a self-sustaining business. Once you can achieve this, now put the business on autopilot by developing systems (click here to learn about developing systems) now you can experiment in new areas to further diversify your portfolio?

Following video explains the concept of this section in Urdu